ITA No.6 of 2017 -1- ---- IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income Tax Appeal No.6 of 2017 Date of decision: July 14, 2017 Commissioner of Income Tax (Exemptions), Chandigarh ....Appellant versus M/s Kids-R-Kids International Education and Social Welfare trust, Chandigarh ....Respondent CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE AVNEESH JHINGAN ------- Present: Mr. Denesh Goyal, Sr. Standing Counsel for appellant-Revenue. ------- AJAY KUMAR MITTAL, J. 1. appellant-Revenue has filed present appeal under Section 260A of Income Tax Act, 1961 (in short, Act ) against order dated 10.03.2016 (Annexure A-2) passed by Income Tax Appellate Tribunal, Division Bench, Chandigarh (in short, 'the Tribunal') in ITA No.781/CHD/2015, claiming following substantial questions of law:- (i) Whether on facts and circumstances of case, order of ITAT is not perverse in holding that Pr.CCIT has not doubted genuineness of activities of assessee whereas Pr. CCIT had denied exemption as assessee had not satisfied condition of Section 10(23C) that it was existing solely for educational purposes? assessee had aims and objects other than education also. 1 of 5 ::: Downloaded on - 03-08-2017 11:17:43 ::: ITA No.6 of 2017 -2- ---- (ii) Whether on facts and circumstances of case, order of ITAT is not perverse in holding that Pr.CCIT has not doubted genuineness of activities of assessee whereas Pr. CCIT had denied exemption as assessee had not satisfied condition of Section 10(23C) that it was not existing for purposes of profit. assessee had not provided for reservation in admission and free tuition to children belonging to weaker section of society thereby indicating its profit motive? (iii) Whether on facts and circumstances of case, ITAT's order is not perverse in directing grant of approval on basis of genuineness of activities which is condition envisaged in second proviso and cannot override basic requirement of existing solely for educational purposes and not for profit? (iv) Whether on facts and circumstances of case, ITAT was justified in directing to grant exemption without commenting on Pr. CCIT's observation that assessee had failed to fulfil crucial condition that it was existing solely for educational purpose and not for purpose of profit? 2. few facts relevant for decision of controversy involved as narrated in appeal may be noticed. respondent-assessee filed application for grant of exemption under Section 10(23C)(vi) of Act for assessment year 2014-15 on 24.09.2014 before Principal Chief Commissioner of Income Tax, N.W. Region, Chandigarh, [in short, 'the Pr. CCIT)]. exemption was denied holding that assessee did not satisfy condition contained in Section 10(23C)(vi) of Act to effect that it was existing solely for educational purposes and not for purposes of profit. Aggrieved by order, assessee filed appeal before Tribunal. Vide order dated 10.03.2016 (Annexure A-2), Tribunal had directed Pr. CCIT to grant registration to respondent- 2 of 5 ::: Downloaded on - 03-08-2017 11:17:44 ::: ITA No.6 of 2017 -3- ---- assessee. It was observed by Tribunal that only reason for denial of exemption could be where officer was not satisfied as to genuineness of activities of assessee. Since Pr. CCIT had not doubted activities of Society, direction was given to him to grant registration under Section10(23C) of Act. Hence, instant appeal by appellant-Revenue. 3. We have heard learned Sr. Standing Counsel for appellant-Revenue. 4. Section 10(23)(vi) of Act reads thus:- Any University or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by prescribed authority. 5. perusal of above provision shows that recognition is given to institution which exists solely for educational purposes provided it is not running for purpose of profit. Secondly, it has to be approved by prescribed authority. only requirement for granting registration under this Section is satisfaction of prescribed authority with regard to genuineness of activities of assessee. It has been categorically recorded by Tribunal that assessee is Trust registered under Section 12AA of Act which makes it quite clear that assessee is pursuing charitable activities. It was further observed that provisions of Right to Children to Free and Compulsory Education Act, 2009, are not applicable to assessee being unaided Society. Since Pr. CCIT had not doubted genuineness of activities of Society, Tribunal directed Pr. CCIT to grant 3 of 5 ::: Downloaded on - 03-08-2017 11:17:44 ::: ITA No.6 of 2017 -4- ---- registration under Section 10(23C) of Act. relevant findings recorded by Tribunal read thus:- provisions of Section 10(23C)(vi) of Act is quite clear to fact that only reason for denial of said exemption can be case where officer is not satisfied as to genuineness of activities of assessee. By not applying provisions of Right of Education Act, it cannot be said that assessee is not doing any genuine educational activities. For non-compliance of Right to Education Act, there is specific appropriate authority which may take action against assessee. Otherwise also, as stated by us earlier, RTE provisions are not applicable to assessee being unaided society. It is not open to Income tax Department to take any such step. There may be some provisions in relevant Act for consequences of such non-compliance but it can certainly not be in form of not granting approval to assessee under Income Tax Act. Since Principal Chief Commissioner of Income Tax has not doubted genuineness of activities of society, we hereby direct him to grant registration under Section 10(23C) of Act. 6. Learned Sr. Standing Counsel for appellant-Revenue has not been able to point out any error in order passed by Tribunal. Reference was made to judgment of this Court in, 'Amrawati Welfare Society vs. Central Board of Direct Taxes and Others', (2017) 390 ITR 471 (P&H), wherein it was held that if company had granted interest-free loan to assessee for purpose of establishing and running educational institution, exemption could not be refused. mere receipt of interest-free loan was not indicative of commercial activity for profit. position in present 4 of 5 ::: Downloaded on - 03-08-2017 11:17:44 ::: ITA No.6 of 2017 -5- ---- case being different, Revenue cannot derive any advantage from said decision. 7. In view of above, no substantial question of law arises. Consequently, finding no merit in appeal, same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE (AVNEESH JHINGAN) JUDGE July 14, 2017 'gs' Whether speaking/reasoned? Yes Whether reportable? Yes 5 of 5 ::: Downloaded on - 03-08-2017 11:17:44 ::: Commissioner of Income-tax (Exemptions), Chandigarh v. Kids-R-Kids International Education and Social Welfare trust